Tenant won't sign lease

Hi guys,

So recently purchased a property with the owner staying on as a tennant. That was one of the conditions to the offer being accepted that we'd let the owner stay on as a tenant until a certain date.

Now we gave the property to an agency to manage asking them to get a 6 month lease signed, its been over 3 weeks of chasing up the property manager who is very unresponsive and we just get the run around saying they've spoken to the tenants but are still waiting on them to sign the lease.

Anyway, what it boils down to is 3 questions:

1) The settlement was done on a Wednesday, yet the tenant has only paid rent from the fortnight starting on Monday. Is that how it works or are they supposed to pay rent from the day of settlement?

2) If the tenant wont sign a lease and continues to drag it on for a few months what are my options considering there's a clause in the contract saying we have to let him stay until a certain date? I'm just worried he can leave at any point if there is no lease in place and could result in rental loss.

3) How soon can I get rid of my property manager if they're being useless?

Thanks in advance!

 

Well what does the clause in the contract say about your "tenants" being there? I wouldn't sign a lease either if I didn't need to...

 

It just says the new owner agrees to allow the current owner to stay on as a tenant until this date at $$$ per week.

 

Yes rent should be paid from day of settlement.
There is an implied lease in place - the verbal agreement and the fact they paid rent and the purchase contract are grounds for an implied lease.
It will be periodic.

Treat it as if there is a written lease in place.
If tenants default etc it will still fall under tenancy law.
Have they paid a bond?

If not breach them on failing to pay a bond.

 

Thank you for that, makes sense.

They haven't paid a bond yet, how long would I need to wait before I can breach them on failing to pay it?

Also, with periodic leases is the tenant required to provide a certain amount of notice before leaving?

Thanks again!

 

Hmmmm

Laws in each state differ. However:

Your conditions of sale and conveyancer should have protected against this situation. No lease signed by a certain date means vendor needs to settle with vacant posession. Should they choose to stay on uninvited then perhaps you have squatters and follow the appropriate removal process.

 

I would not have settled without a signed lease in hand, you essentially have nothing now.

Do people not ever see those TV shows where people just stay in a place for months/years without paying and refusing to leave ?

Do you think an insurer will pay if you take out a policy once your house has burnt down ?

Why did you settle ?

If your person doing the conveyance knew about all this, what did they advise ?

 

I agree with @Xenia and @dabbler the lease agreement should have been signed and in place before settlement. I would be taking this up with the managing agent and was there anything in writing between yourself and selling conveyancers in regards to them staying on as tenants.

 

You cannot force a tenant to sign a lease either. If the conditions in the contract were for a lease to be in place, you should still have signed that lease with them. The contract saying there should be a lease does not override the requirement to have one.

You're really powerless to make them sign anything so you'll only be able to issue them with a notice to leave and depending on the state (and given it's periodic), the time frame will differ.

 

Yes they need to give you a certain amount of notice - 21 days for SA but check with your state (sorry I'm not even sure where you are).

Breach them for failing to pay bond now.

Andrew is right, you can't force them to sign now - no incentive to, but you can take action on the situation where it is right now.

 

Honestly it's my first investment property and the owner staying on as a tenant is something I took lightly. When I spoke to them and the selling agent they made it seem like the lease was a non-issue and that they'd happily sign a 6 month lease.

I dropped the ball on not getting it signed before settlement and now I'm realizing my conveyancer did the same because I specifically sought his advice on this clause and he simply said if anything it was beneficial to me as an investor to have the home occupied, however he didn't recommend I get a lease signed before settlement.

I will do that and see if there is anything in writing, however I highly doubt there is.

Given that the contract only says the date they can stay up to and the agreed upon rent, am I still legally able to issue them a notice to leave?

Okay, I'm in NSW. Will do! If they continue to stall in paying the bond and don't make up for the missing rent do I have grounds to evict despite the clause in the contract?

 

That annoys the heck out of me, did you tell them your new to all this ? They should have sat you down and given a whole lot of advice & helped you, while it is not the job or who is doing the conveyance to do the leasing, you are paying them for expertise.

These days people do not tell or advise anyone of anything & property is a quagmire of things that can go wrong, they do not seem to have done right by you, assuming you did not just ignore or not read information they sent.

The sales agent works for the vendor, but if they were decent, they would help & if it is the same agency who is supposed to manage, then they are implicated IMO too.

You want to find a solicitor that will actually help you through all this and advise on many aspects of the property if your buying or selling again.

It is not your fault but you can probably see what sort of trouble you can get yourself into.

So what you need to do now, is ascertain, is this prior owner willing to pay a bond and pay rent on time, or not, if yes, by the end of this week everything should be in place and up to date, if not done this week, then work out if the agent managing is going to help you sort this out by acting now, or not, if yes, act decisively now, they should send all notices straight away & move to get them out I would say.

Have a talk to fair trading also.

This is going to cost you it seems, let's just hope they have been a bit slack but will fix it all ASAP. Just make no mistake, everyone in this puzzle all know a tenant pays bond and rent.

PS how old are you ? do you have parents/friends that know a little about property to help ?

 

Was the tenant required to pay bond under the verbal or implied lease? Seems pretty murky.

 

It's an interesting one because notice periods usually apply when a lease has already been in place and the time frame differs depending whether lease is due to end, has already ended and entered periodic or whether the tenant is behind in rent. In NSW, you still must issue the notice by snail-mail (there is a whole thread on this somewhere from a few weeks ago!).

I think you should call the OFT for guidance on this one to check whether there is an implied lease based on the contract. If there isn't then it stands to reason that there is no notice period as they are essentially squatting. If there is based on the information in the contract/you're providing then the information below will apply and you will probably be deemed to be on periodic.

Amount of notice required

If you want the tenant to vacate you must give them a termination notice. The notice must:

• be in writing
• be signed and dated by you or your agent
• be properly addressed to the tenant
• give the day on which the residential tenancy agreement is terminated and by which the tenant is required to vacate
• where appropriate, give the grounds/reason for the notice.

You can write your own notice or use the model termination notice provided by Fair Trading.

The minimum period of notice you can give the tenant to vacate is:

• 14 days – if the tenant is 14 days or more behind with the rent or has committed some other breach of the tenancy agreement
• 30 days – if the fixed term of the agreement is due to end
• 30 days – if the premises have been sold after the fixed term has ended and vacant possession is required by the buyer under the terms of the sale contract
• 90 days – if the fixed term period has expired and no new agreement has been signed.

These notice periods are designed to give tenants reasonable time to find another rental property. If they can find a property sooner they can move out at any time without having to give you any formal notice. Except where notice has been given for the end of the fixed term, the tenant's responsibility to pay rent ends from the date they hand back possession, not the end of the notice.

 

Yeah I made them well aware I was new to all this, honestly this experience has been an eye opener for sure. I'm not sure if it was just my inexperience in choosing the right people to deal with or if I was just unlucky, but accross the board from agents to conveyancers to lenders I had very little support and found myself constantly chasing up for things to be done.

Pretty much only got information out of them when I did my research on something and specifically asked them about it, even then I mostly got the run around and was told to rely on my own research. Which I understand by the way, I know the onus is always on the buyer but it shouldn't be so hard to get guidance from people you're paying to do exactly that.

Anyway, thanks heaps for the information, I'm still trying to get in touch with my property manager to see where I'm at.

I'm 23 by the way, I do have a few friends who know a bit about property but its hard to rely on bits and pieces of information they've got from past experiences.

Not that I'm aware of no.

Fair enough, that's great information thank you. I will get in touch with the OFT and see if the contract does imply a lease.

 

Anytime, always happy to help!

 

When you buy you include a clause to ensure a tenancy lease is made. Then the former vendor is committed to a lease. Without it = evict. I sold out fomer house that way. We leased from the buyers (new couple) and yes had to do all the normal stuff such as a lease, bond etc..

 

Its not your property managers fault....you needed a better conveyancer.

All of this should have been sorted WAY before settlement with the lease (or license if only for a short time) documented and signed at settlement.

What DO you have signed about late payment of rent? and how much rent pw? and who to pay rent to etc?

I've done this before when purchasing investment properties INCLUDING the right for advance notice before vacating AND the right to advertise and show tenants through for 1 hour each Saturday after they give notice so there is no break apart from 1 move out day etc in between the old owner and my new tenants moving in.

Its too late now.....but for next time use a better conveyancer eg.
Amanda Bennett
Elan Legal
Edgecliff Centre, Level 5,
203-233 New South Head Road,
Edgecliff NSW 2027
+61 (412) 399-294
[email protected]

 

I had the same position as yourself with the owner contacting me directly to rent back from me. It was due to a separation /divorce that he was forced to sell the property. My lawyer gave my mobile number - we met talked (he said his primary school kids had issues leaving the place) - it was walking distance to school, and renovated extensively. I said sure - you can stay - signed up a lease properly for 2 years- agreed on certain conditions and nearly 1 year now - rental paid on time no issues. he keeps the place in good condition like it is his own

Personally if he won't sign or pay rent - will kick him out. Your lawyer should have advised you all of this prior to settlement as without a lease (insurance will not even pay your rental)